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The deep threats of dark money have been known for decades: Paul Heise

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Posted
Wednesday, September 6, 2017 3:16 pm

Paul Heise

The subtitle of the recent book “Dark Money” is “The Hidden History of the Billionaires Behind the Rise of the Radical Right.”

Is there a cabal of billionaires who are secretly spending hundreds of millions of dollars to elect Donald Trump and the radical right? Well, yes, there is.

Jane Mayer, The New Yorker staff writer who wrote the book, never uses the word cabal but “the integrated Koch network” is at least a conspiracy. The book tells the story of how the American super-rich families, especially the Koch brothers, used dark money to finance a conservative usurpation. Although the book is titled “Dark Money” and is about politics, it neglects the real story which is the economic impact of the corporate actions.

The economic story begins, not in 1980 as most of the research on money and politics suggests, but in 1971 with the revolt of the millionaire class in response to a confidential memorandum titled “Attack on American Free Enterprise System.” The man who authored the memo, Lewis Powell, was a tobacco industry lawyer who, several months later, was named an associate justice of the U.S. Supreme Court.

Lewis asserted that the broad attack on the system called for a corporate takeover of the education and court systems of the United States. He succeeded in arousing corporate America to this “broad attack” that he asserted “No thoughtful person can question.”

The Powell Memo called for and got a revolution in the political attitude of the American corporate community. From 1940 to 1975, middle-class American workers saw the end of the Depression and the full installation of the New Deal. There were strong unions, productivity-related wages, safe banks and a safety net of benefits.

But workers were looking for more serious participation such as co-determination, profit-sharing and the benefits that would include a healthy home and workplace. But Powell heard “a chorus of criticism ... from perfectly respectable elements of society: from the college campus, the pulpit, the media, the intellectual and literary journals, the arts and sciences, and from politicians.”

Corporate powers feared the fact that “almost half of the (college) students favored socialism of basic U.S. industries.” Lewis saw this as a danger and he called corporate America to battle.

The history of labor's problems over the next 40 years can be explained as part of corporate America’s illusion that they were fighting for their life. The corporate officers recognized that the programs that they were advocating would enhance profits because they were intrinsically aimed at cutting wages and benefits.

Deunionization was, of course, first in importance to corporate leaders. Following President Ronald Reagan’s decertification and firing of the professional air-traffic controllers and the government takeover of the Teamsters, the unions knew they were in trouble.

Programs of securitization, financialization and privatization were specifically designed to shift money to financial institutions and thus to their owners. Privatization was meant to shift the risk of ownership to the workers and shift the cost of health care and education from government and the community to the individual.

Student loans are another example of consumer abuse. Corporate programs of globalization, mergers and acquisitions and bankruptcy were put into place to redistribute wealth to the rich.

NAFTA is probably the clearest example of government programs championed by corporations to transfer money from workers to the wealthy. The bailout of the banks and not the debtors in the financial crisis of 2008 is also a good example. Monetary policy maintained unemployment at an unknowable “natural rate.”

The intended result of these and a wide range of other programs like off shoring and outsourcing was to redistribute income from the workers to the rich. The resulting income inequality was intended and explains why, following 1980, workers received none of the increase in productivity that took place. The corporations won the battle and are still counting the spoils which runs into the trillions of dollars.

The Powell Memo is not the only cause of the falling workers wages. But it started things off, provided a reason for attacking workers, and made a lot of people incomparably rich.

Lewis Powell and Company are not democratic enough to recognize that “those perfectly respectable members of society” knew what they wanted and had the right of self-determination. We come back to the basic question: Should a small group of men be able to impose their will and take more than their share because they have the money to do it?

Paul A. Heise, of Mount Gretna, is a professor emeritus of economics at Lebanon Valley College and a former economist for the federal government.